Broad rules on $3B a year Alberta carbon tax could make it slush fund:opposition

EDMONTON – Alberta Premier Rachel Notley says her government will keep a tight rein on a multibillion-dollar carbon tax to make sure the money goes only to green programs and incentives.

Notley says none of the money is to go to broader or unrelated expenditures, such as paying down the deficit and debt.

“Every cent that is collected by the carbon tax will be recycled back into the economy immediately,” Notley told reporters Tuesday on a conference call.

“This is not a situation where we’re going to apply it against the deficit, for instance, to maintain current operations, or anything like that.”

Notley said the money will be used to help the province become a green economy and include rebates for lower and middle income earners, money to help small businesses, efforts to help industries such as coal adversely affected by the transition, and money to develop renewable resources.

“We will continue to monitor (the tax spending) as we go forward with it to make sure that we’re getting the outcomes we’re seeking,” said Notley.

The carbon tax is one of the pillars of Alberta’s new climate change strategy. The plan will cap oilsands emissions, phase out coal-fired electricity plants, and move to more enviro-friendly fuel sources over the next 15 years.

The tax on emissions, to begin in 2017, will affect everything from the price of gas at the pump to home heating and power bills.

It’s expected to bring in $3 billion a year when fully implemented in 2018.

Opposition critics say strict rules need to be in place to keep this levy from devolving into an all-purpose slush fund.

Notley says the carbon tax could be used for other priorities far down the road, but only after her government is convinced it has served its purpose in transforming Alberta to a green economy.

Notley has been criticized for characterizing the tax as “revenue-neutral” because all the tax money is being directly recirculated into the economy.

She was asked why she didn’t pursue the carbon tax model in B.C., where some of the cost of the tax is offset by corresponding reductions in other levies.

“That does not lead to the kind of change we’re trying to generate here,” she replied.

She said the Alberta model is a better way to deliver incentives for greener technology, and to assist in the orderly phase out of coal-fired electricity while keeping electricity plentiful, reliable, and affordable.

“These are things that will not happen on their own, and so we’ll need to dedicate resources to make sure that they do happen,” she said.

Under the carbon tax, fuel prices are to rise 4.7 cents a litre by 2017 and to 7.1 cents a litre by 2018. Household bills will rise by $320 a year for the average family in 2017 and hit $470 by 2018.

The government has promised rebates to about 60 per cent of Albertans, those in the middle to lower-income bracket.

“There really aren’t that many Albertans who will be hit hard in the pocketbook,” said Notley.

“We’re talking about recycling (the money) to most households.

“And those households that don’t enjoy the benefit of the recycling are going to be ones that are very high users of carbon, who have the capacity to reduce their use and therefore the amount of tax that they pay.”